Gonzales Corporation Generated Free Cash Flow of $88 Million This

question 42

Multiple Choice

Gonzales Corporation generated free cash flow of $88 million this year.For the next two years,the company's free cash flow is expected to grow at a rate of 8%.After that time,the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year.If the weighted average cost of capital is 10% and Gonzales Corporation has cash of $100 million,debt of $300 million,and 100 million shares outstanding,what is Gonzales Corporation's expected free cash flow in year 2?

• A)$1,779.15
• B)$95.04
• C)$1,881.8
• D)$102.64

---

Definitions:

Longitudinal Studies

Research designed to observe the same subjects over a period of time, allowing for the study of changes and developments.

Cross-Sectional Studies

Research designs in which subjects of different ages are studied at one point in time.

Developmental Trends

Describes the patterns and directions of growth, change, or progress in any developmental aspect over a period.

Positive Correlation

A relationship between two variables in which both variables move in the same direction.